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eBay's Looming Identity Crisis

I totally agree with Suki and this article in general. I used to be an avid EBay bargain-hunter a few years ago and was able to land many great deals on electronics and other high-MSRP (manufacturer's suggested retail price) items. However, the site's popularity surged, as did its fees and paypal-related charges, which increased the sellers' costs, and therefore, required sales price.

This translated into fewer bargains to be found, which reduced the ''active return'' for buyers who specialize in finding cheap products on Ebay. The costs (i.e. time and effort) of actively watching the auction now exceeds the benefits, since the spread between the price we would normally pay (on Amazon, for example) and the price we can find it for on EBay is lower. That is why many buyers just gave up on auctions and either stayed loyal to EBay (and used the buy it now option) or switched entirely to Amazon.com (like I did).

I'm not all too sure what EBay can do about it, since it will always suffer from the winner's curse; increased popularity (and therefore higher profits) leads to decreased appeal (and therefore lower profits). It can't rely indefinitely on its non-core businesses for generating growth and returns for its shareholders. Perhaps over the long term it might consider a merger with Amazon (now wouldn't that be something special?!), if of course it can pass anitrust rulings. The same questioning as the Sirius-XM merger would apply to this one I'm sure...

Interesting story to follow.